We can think of restoring spending power in two ways, with two different ideas of compensation.

   Since the price rose, it is as if our consumer's income fell; therefore, we must give her back some income to remove the income effect. The first idea (expenditure compensation) is to give her enough money to enable her to purchase her original consumption bundle, at the new higher price for movies. This would place her on the green budget constraint shown to the right.

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